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EXHIBIT 10.2
AGREEMENT
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THIS AGREEMENT is made and entered into this 2 day of April, 1998, by
and between the BANK OF SOUTHERN OREGON, an Oregon Banking corporation,
hereinafter referred to as "Bank" and XXXX XXXXXX, hereinafter referred to as
"JA".
R E C I T A L S:
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1. Bank is an Oregon banking corporation authorized to do business in
the State of Oregon. Bank is in the process of forming a Bank Holding Company,
hereinafter referred to as "BHC", which is expected to acquire all of the stock
of the Bank in a stock exchange transaction during 1998.
2. JA has the necessary expertise and experience to run a bank holding
company and is willing to serve as President and Chief Executive Officer of
same.
For the reasons recited above and in consideration of the following
mutual promises and covenants, the parties hereby agree as follows:
SECTION ONE
EMPLOYMENT
Bank hereby employs JA to act as the Chief Executive Officer of Bank
and, upon its approval, the BHC. JA hereby accepts such employment upon the
terms and conditions hereinafter set forth.
SECTION TWO
TERMS OF EMPLOYMENT
The term of employment shall begin as of May 1, 1998 and shall extend
until terminated as provided for herein. This Agreement shall not be effective
until May 1, 1998.
SECTION THREE
COMPENSATION
For all the services to be rendered by JA to Bank, in any capacity,
including those services provided as Chief Executive Officer or any other duties
assigned to him by the directors of Bank, Bank agrees to pay JA a salary of
$150,000.00 for the first year of this Agreement. This shall be referred to as
the "basic salary". Such basic salary shall be paid to JA in bi-monthly
installments of $6,250.00 on the 15th of each month and on the last day of each
month. The first such bi-monthly installment of $6,250.00 shall be paid on May
15, 1998 and the same bi-monthly installments of $6,250.00 shall be paid
thereafter during the term of this Agreement. The Board of Directors of Bank
shall have the right to adjust the base salary of JA on an annual basic.
However, JA's salary and other benefits, in the aggregate, will not be less than
that initially set forth by the terms of this Agreement.
SECTION FOUR
DUTIES
JA accepts employment with Bank on the terms and conditions set forth
in this Agreement, and agrees to devote his full time employment to the
performance of his duties under this Agreement. Such duties include those but
are not limited to those set forth in the Statement of Responsibilities, a copy
of which is attached hereto as Exhibit "A" and by this reference incorporated
herein.
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JA shall perform such specific duties and shall exercise such specific
authority as may be assigned to JA from time to time by the Board of Directors
of Bank. In performing such duties JA shall be subject to the direction and
control of the Board of Directors of Bank. JA further agrees that in all aspects
of such employment JA shall comply with all applicable laws and regulations and
with the policies, of Bank from time to time established and shall perform his
duties faithfully, intelligently and honestly to the best of his ability and in
the best interest of Bank. If requested to do so JA shall serve as a director of
Bank without additional compensation.
SECTION FIVE
ADDITIONAL BENEFITS
In addition to the basic salary set forth above Bank agrees to provide
JA with the following benefits:
A. JA will receive fringe benefits offered to Bank employees. These
include health insurance coverage, participation in incentive compensation and
401 plans, sick leave benefits and paid vacation benefits. The terms and
conditions of such benefits shall be as established from time to time by the
board of directors of Bank. Notwithstanding the foregoing, JA will be allowed
not less than four weeks of paid vacation per year on the terms and conditions
provided in Bank's vacation pay benefit plan.
B. In accordance with its policies and procedures established from time
to time by its board of directors, Bank will reimburse JA for reasonable
business expenses, including travel expenses.
C. Bank will purchase a vehicle for use by JA during the term of his
employment. The vehicle shall have a maximum cost of $35,000.00. If possible and
if to the benefit of both Bank and JA, Bank may elect to purchase JA's existing
vehicle. Bank will pay all expenses associated with the maintenance, repair and
operation of the vehicle, including insurance coverage. JA's year end W-2 will
include the value of the personal use of the vehicle as required by IRS
regulations.
D. Bank will purchase a $250,000.00 term life insurance policy on JA to
age 65. The beneficiary shall be as designated by JA. The type and term of
policy to be at Bank's discretion.
E. Subject to JA's ability to qualify, Bank will purchase a disability
insurance policy for JA providing income protection equivalent to 50% of JA's
base salary, initially $6,250.00 per month. This shall be payable up to age
sixty-five (65). Disability payments shall commence 90 days from the date of
disability.
F. Bank will pay for JA's monthly dues at the Rogue Valley Country
Club.
SECTION SIX
STOCK OPTION PLAN
Upon the execution of this Agreement JA shall be granted an option to
purchase 25,000 shares of the common stock of Bank. If Bank grants stock
dividends, declares stock splits or other adjustments to its currently issued
and outstanding stock, JA's option to purchase shall likewise increase to
reflect the benefit of such action. This option to purchase the 25,000 shares
shall vest as follows:
A. 30% (7,500 shares) on the third anniversary of his employment.
B. 20% (5,000 shares) at the end of each of the fourth, fifth and sixth
years of employment.
C. 10% (2,500 shares) after completion of the seventh year of
employment.
Notwithstanding the above, if there is a sale or change in control of
Bank then the option to purchase the 25,000 shares shall vest as follows:
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A. 50% (12,500 shares) if a sale or change in control occurs before a
completion of the first three (3) years of employment;
B. 50% (12,500 shares) representing the remaining balance of option
shares if a sale or change of control occurs after the first three (3) years of
employment.
The non-vested options will expire (i) upon termination of JA's
employment by Bank for cause, (ii) ninety [90] days after termination of JA's
employment by Bank without cause, (iii) upon termination of JA's employment by
JA without cause, (iv) ninety [90] days after termination of JA's employment by
JA with cause, or (v) one [1] year after JA's death or disability. JA shall have
ninety [90] days after termination of his employment or vesting of his stock
option, whichever last occurs, to exercise his option(s) to purchase. If the
Bank terminates JA's employment without cause, or JA leaves with cause, for
stock option vesting purposes only, JA shall be deemed to have continued through
his next employment anniversary date.
For the purposes of this Agreement, a sale or change of control of Bank
shall constitute a sale or change in ownership of more than 40% of its voting
stock to one entity other than the BHC.
The stock option plan, and the terms and conditions thereof, are
subject to approval by JA and the shareholders of Bank. Bank will use its
reasonable best efforts to qualify such stock option plan and to establish an
option price available to JA based upon the fair market value of the shares as
required by generally accepted accounting principles, the Internal Revenue Code
and regulations thereunder, for qualified stock options. It is anticipated that
the shareholders of Bank will approve the stock option plan at a meeting of such
shareholders in May, 1998 and that pursuant to the terms of the Bank Holding
Company formation the plan will become the plan of the BHC. The terms and
conditions of the grant of options to JA, in addition to those set forth above,
are subject to approval by JA. JA shall either approve or reject the stock
option plan and grant of option, by written notice to Bank, on or before June 1,
1998. In the event JA rejects the stock option plan or grant of option, or in
the event this stock option plan is not approved by shareholders then either JA
or Bank may terminate this Agreement and neither party shall have any liability
to the other.
SECTION SEVEN
TERMINATION
JA acknowledges that he is an "at will" employee and that he may be
dismissed at any time, with or without cause, for any reason whatsoever. JA may
terminate this Agreement, at any time, for any reason whatsoever, upon written
notice to Bank. For the purposes of this Agreement, termination of JA's
employment by Bank for cause shall include, but is not limited to, the
following:
A. JA fails or refuses to comply with the policies, standards, and
regulations of Bank as established by the Board of Directors from time to time.
B. JA commits an act of fraud, dishonesty, material misconduct, gross
negligence, gross neglect of his duties, continued and repeated insobriety, or
conviction of any crime constituting a felony;
C. Conduct which is seriously prejudicial to Bank including, but not
limited to neglect of duty or breach of this Agreement.
D. JA suffers a permanent disability. For the purposes of this
Agreement "permanent disability" shall be defined as JA's inability due to
physical or mental illness, or other cause, to perform the majority of JA's
usual duties for a period of 90 days. Permanent disability shall be determined
by a licensed physician hired by Bank. JA hereby agrees in advance to an
examination by a licensed physician selected by Bank if so required to determine
whether or not JA suffers a permanent disability.
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E. In the event of the death of JA. In such event Bank shall pay to
JA's estate the salary which would be otherwise payable to JA through the end of
the month in the month in which JA's death occurs.
F. A violation of the State of Oregon or Federal Banking Rules and
Regulations of such a nature as to disqualify JA from his duties as set forth
herein.
In the event JA is terminated from employment by Bank for cause or in
the event JA quits the employment of Bank without cause then JA will not be
entitled to any severance pay or other benefits following the date of
termination.
For the purposes of this Agreement, termination by JA for cause shall
include, but is not limited to, the following:
A. JA suffering a permanent disability as defined above.
B. JA is required by the Board of Directors of Bank to perform any
illegal or fraudulent act.
C. A breach by Bank of the provisions of this Agreement.
In the event JA is terminated by Bank without cause or in the event JA
quits with cause then JA shall be entitled to the following benefits:
A. The payment of one year's basic salary, equal to the basic salary
paid to JA during the 12-month period preceding the date of termination. Such
payment shall be made in 12 equal monthly installments during the 12 months
following the date of termination.
B. In the event of a sale or change of control of the Bank, the
guaranteed payment will be reduced by the amounts received by JA through
employment compensation, non-competition payments and/or other benefits and
payments made by the succeeding or acquiring entity. JA will be entitled to any
additional compensation received by JA after credit to Bank for guaranteed
payments.
C. Payment of these benefits is contingent upon JA signing a complete
release of liability to Bank for termination of his employment and all claims
arising through the date of termination of his employment.
Notwithstanding the above, if JA goes to work for or consults with
another entity which is in competition with Bank then Bank will not be required
to make any further payments hereunder.
SECTION EIGHT
NOTICES
Written notice shall be deemed to have been received by the respective
parties when mailed by both first class and certified mail, return receipt
requested to the following addresses:
Bank Xxxx Xxxxxx
0000 X. XxXxxxxxx Xxxx 000 Xxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxx 00000 Xxxxxxx, XX 00000
These addresses will remain in effect until the respective party has
notified the other in writing of a change of address.
SECTION NINE
RESTRICTIONS
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During the term of this Agreement, or in the event Bank terminates JA's
employment for cause or JA terminates his employment without cause, and at
Bank's sole option for a period up to one (1) year after such termination, JA
agrees that the following restrictions and limitations shall apply to him:
A. JA will not, on behalf of himself or on behalf of any other person,
firm, corporation, limited liability company or any other entity, call on any of
the customers of Bank in any county where Bank maintains an office or branch, or
of any of its affiliates or subsidiaries for the purpose of soliciting services
and/or providing to any of the customers any banking services or other products
or services provided by Bank, nor will he, in any way, directly or indirectly,
for himself or on behalf of any other person, firm, corporation, limited
liability company or other entity, solicit, divert or take away any customer of
Bank, its affiliates or subsidiaries. For the purposes of this Agreement the
phrase "call on" includes, but is not limited to, contacting a customer in
person, by telephone, by facsimile transmission, by letter, by electronic
transmission or by any other means calculated to make contact with such customer
of Bank.
B. JA will not, on behalf of himself or on behalf of any other person,
firm, corporation, limited liability company or any other entity, solicit or
hire any of the employees of Bank or any of its affiliates or subsidiaries.
C. If Bank elects to apply the restrictions of this Article to JA for a
period up to one (1) year after termination of JA's employment, during such
period, Bank shall timely and regularly pay JA the monthly basic salary received
by JA at the date of such termination and shall continue JA's health insurance
during such period, providing the same coverage provided to Bank's employees.
SECTION TEN
CONFIDENTIAL INFORMATION
Both during and after termination of employment, JA agrees, that in
addition to any other limitation contained in this Agreement, regardless of the
circumstances of the termination of employment, he will not communicate to any
person, firm, corporation, limited liability company or other entity, any other
information relating to customer lists, prices, secrets, advertising, loans,
accounts, nor any confidential knowledge, information or secrets that JA may
from time to time acquire with respect to the business of Bank, or any of its
affiliates or subsidiaries. JA agrees upon termination of his employment that he
will not retain originals or copies of any of the business records, information
or documents of Bank, in any form whatsoever, including but not limited to
information on computer disks and hard drives.
Notwithstanding the above, disclosure is authorized only when done in
the course and scope of JA's employment or as required by law.
SECTION ELEVEN
INJUNCTIVE RELIEF
JA hereby acknowledges that the services to be rendered under this
Agreement are of unique, special and extraordinary character that would be
difficult or impossible for Bank to replace, and by reason of such difficulty,
JA hereby agrees that for violation of any of the provisions of this Agreement,
Bank shall, in addition to any of the rights or remedies available under this
Agreement, at law or otherwise, be entitled to an injunction to be issued by a
court of competent jurisdiction enjoining and restraining JA from committing any
violation of this Agreement and JA hereby consents to the issuance of such
injunction.
SECTION TWELVE
COMMUNICATIONS TO BANK
A. From the time this Agreement commences until the termination of this
Agreement, JA shall communicate and channel to Bank all knowledge, business, and
customer contacts and any other matters of information
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that could concern or be in any way beneficial to the business of Bank, whether
acquired by JA before or during the term of this Agreement; provided, however,
that nothing under this Agreement shall be construed as requiring such
communications where the information is lawfully protected from disclosure as a
trade secret of a third party.
B. Any such information communicated to Bank as stated above shall be
and remain the property of Bank, in spite of the subsequent termination of this
Agreement.
SECTION THIRTEEN
BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
assigns, personal representatives and successors in interest. This Agreement may
be assigned to and assumed by the BHC upon its approval. Upon formation of BHC
this Agreement shall be deemed to have been assigned and assumed by BHC. JA
shall then be deemed to be an employee of BHC and not of Bank.
SECTION FOURTEEN
GOVERNING LAW
The parties agree that this Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Oregon. The parties
agree that exclusive venue and jurisdiction shall lie in Xxxxxxx County, Oregon.
SECTION FIFTEEN
CREATIVE WORK
JA agrees that all creative work and work product including, but not
limited to, all technology, business management tools, processes, software,
patents, trademarks, copyrights developed by JA during the term of this
Agreement, irrespective of when or where such work or work product was produced,
constitutes work made for hire, all rights of which are owned by Bank. In any
event, I assign to Bank all rights, title and interest, whether by way of
copyrights, trade secret, trademark, patent or otherwise, in all such work
and/or work product, whether or not the same is subject to protection by patent,
trademark, or copyright laws.
SECTION SIXTEEN
ENTIRE AGREEMENT
This Agreement, the stock option plan, the policies and procedures
including personnel policies adopted by Bank's board of directors, shall
constitute the entire agreement between the parties and any prior understanding
or representation of any kind preceding the date of this Agreement shall not be
binding upon either party except to the extent incorporated in this Agreement.
Notwithstanding the above, the board of directors of Bank shall have the right
to unilaterally modify, amend and/or revise its policies and procedures
including its personnel policies.
SECTION SEVENTEEN
MODIFICATION OF AGREEMENT
Any modification of this Agreement or additional obligation assumed by
either party in connection with this Agreement shall be binding only if
evidenced in writing signed by each party or any authorized representative of
each party.
SECTION EIGHTEEN
NO WAIVER
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The failure of either party to this Agreement to insist upon the
performance of any of the terms and conditions of this Agreement, or the waiver
of any breach of any of the terms and conditions of this Agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
SECTION NINETEEN
ATTORNEY FEES
In the event a suit or action is filed concerning this Agreement then
the prevailing party shall be awarded their reasonable attorney fees as set by
the trial court, or if on appeal, by the appellate court.
SECTION TWENTY
TIME OF EXECUTION
JA acknowledges that this Agreement has been executed prior to the time
that JA actually commenced working as Chief Executive Officer of Bank.
SECTION TWENTY-ONE
REPRESENTATIONS
After April 30, 1998, JA represents and warrants to Bank that there are
no employment contracts or other contractual obligations to which JA is subject
which prevents JA from entering into this Agreement or from fully performing
JA's duties under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
BANK OF SOUTHERN OREGON
By
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Its:
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Xxxx Xxxxxx
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STATEMENT OF RESPONSIBILITIES
Chief Executive Officer/President
The CEO/President of BANK OF SOUTHERN OREGON ("Bank") shall be responsible for:
STRATEGIC LEADERSHIP
Developing and implementing a long-term plan which leverages the assets of the
companys various holdings in combination for the greatest possible return, while
minimizing the potential of loss for the whole.
Exercising leadership in decisions and activities relating to acquisitions,
mergers, divestments or joint ventures.
Understanding, seeking out and exploiting market opportunities to create a
cumulative value that is greater than the sum of the individual parts.
Establishing clear performance objectives and standards for each holding,
enuring that the president/CEO of each holding has necessary resources, then
monitoring performance and acting appropriately.
Understanding when a given holding has reached the maximum level/capacity of
growth.
Determining whether to add responsibility/market to an existing holding or to
create a new holding to respond to new opportunities.
MANAGEMENT LEADERSHIP
Understanding the strengths, priorities and weaknesses of each holding to
produce a synergistic whole.
Managing the presidents/CEOs of each of the holding, working with them to
develop plans and strategies, knowing when to step in and when to step back.
Exercising leadership in recruiting and hiring senior managers for new
enterprises.
Providing appropriate leadership and vision and communicating that to employees
throughout the organization. Ensuring that human resources philosophies, systems
and support are consistent throughout the company.
Establishing policies and mechanisms to ensure that channels of critical
dialogue are open and effective throughout the company.
FINANCIAL
Monitoring the flow of capital within the company.
Working with presidents/CEOs to ensure financial soundness and success of each
holding and the company itself.
OTHER
Representing the company to the larger community.
The CEO/President shall report to the board of directors of the company.
